Oscar Health to join Humana in a small business venture

For the last five years, Oscar Health has sought to portray itself as a new kind of health insurer, taking an approach that set it apart from its more traditional competitors.

Now, Oscar plans to work with one of those rivals on a new venture.

The start-up plans to announce on Wednesday that it is working with Humana, one of the biggest insurance companies in the United States, on a venture for small-business health insurance in Nashville.

The venture represents just one partnership in one metropolitan region. But it highlights Oscar's efforts to expand beyond the individual plans it has sold since its inception into plans for small businesses.

Founded in 2012, Oscar pitched itself as an insurer steeped in technology and friendlier to customers. That helped the company raise more than $720 million from investors, including the venture firm of the co-founder Joshua Kushner, the younger brother of Jared Kushner, President Trump's son-in-law and senior adviser.

Oscar's pitch has gained converts, allowing the company to expand into several states, including California, New York and Texas. But for much of its existence, it has lost money, including $124.1 million in New York State last year. Its overall individual-plan membership fell to 90,171 as of March 31, from 106,000 in 2016.

(The company disclosed in May that its overall loss in the first three months of 2017 had narrowed by 47 percent from the same time last year, to $25.8 million.)

The company has said it wants to enter the market for employer-provided insurance, which accounts for roughly half of all Americans. Three months ago, it announced the opening of Oscar for Business, starting in New York.

"The individual market was a good starting point," Mario Schlosser, Oscar's chief executive, said in a telephone interview. "But it was clear from the beginning that the majority of insurance in the U.S. is delivered through employers."

Nashville is a new step for Oscar.

The germ of the partnership lay in conversations that Humana held over the years with Oscar executives, representatives of each company said in interviews.

Several months ago — before Humana's deal to sell itself to Aetna collapsed amid opposition from government regulators — Bruce D. Broussard, Humana's chief executive, met with Mr. Schlosser and Joel I. Klein, Oscar's chief policy and strategy officer, to find ways for the two companies to work together.

"Humana has been an organization that's willing to test and learn over the years, and we're not afraid to partner with companies thinking outside the box," said Beth Bierbower, the president of the employer group segment at Humana.

She added, "It seemed to me that, since I was very focused on small businesses, once I understood that they were really going in that direction, a deeper conversation made sense."

Ms. Bierbower and Mr. Klein, who previously was chancellor of New York City's public schools and a top lieutenant to Rupert Murdoch, spent months devising what became the Nashville partnership.

"We've found common ground with Humana," Mr. Schlosser said. Speaking of Humana's interest in innovations, he added, "We speak the same language in many ways."

Nashville was chosen because of its fast-growing population and its status as a hub for health-care-related technology start-ups, Ms. Bierbower said.

Under the terms of the venture, Humana will provide the necessary licenses to operate in the Nashville area, as well as the network of doctors. But businesses will go through Oscar, which will have teams, including nurses, that work with specific customers.

Each company owns a 50 percent stake in the partnership.

The three executives said the partnership was just that, and not a prelude to a merger. Oscar is focused on continuing to grow elsewhere, including New Jersey, where it is re-entering the insurance market after withdrawing this year, and Cleveland, where it is in a partnership with the Cleveland Clinicon individual insurance plans.

Mr. Schlosser and Mr. Klein expressed confidence that the company could continue to operate despite the turmoil enveloping Republicans' health care overhaul proposals in Washington.

"As we move forward, the market will continue to stabilize," Mr. Klein said.

Meanwhile, he added, "we're a start-up; we've got some big investments that we need to make."